To streamline its product portfolio and reduce its debt, Valeant Pharmaceuticals (VRX) announced divestiture plans in 4Q16. In 2016, Valeant managed to pay down its permanent debt of ~$1.8 billion.
If Valeant manages to avoid default in its debt repayment in 2017 and 2018, its share price and that of the VanEck Vectors Pharmaceutical ETF (PPH) may be positively affected. Valeant makes up 0.82% of PPH’s portfolio.
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Of the seven analysts covering Valeant Pharmaceuticals (VRX), in March 2017, one has rated the company as a “strong buy,” and five have rated it as a “hold.” Only one analyst has rated Valeant as a “sell.” Approximately 14% of analysts covering the company have given it some form of “buy” recommendation.
Of the 21 analysts covering Endo International (ENDP), in March 2017, ~49% have rated the company as a “buy.” Approximately 83% of the 29 analysts covering Celgene (CELG) have given it “buy” recommendations. Approximately 67% of the 27 analysts covering Biogen (BIIB) have rated the company as a “buy.”
Valeant Pharmaceuticals has decided to sell off three of its skincare brands—CeraVe, AMBI, and AcneFree—to L’Oréal, for a total consideration of $1.3 billion. The company will also be selling off Dendreon to Sanpower for around $819.9 million. In non-core geographies, the company is divesting its businesses, such as Euvipharm in Vietnam and Armoxindo in Indonesia. Valeant also plans to divest its Brazilian operation, Instituto Terapeutico Delta. On December 8, 2016, Valeant completed the sale of North American commercialization rights for the orphan drug, Ruconest, to Pharming Group. In 4Q16, the company divested its Synergetics OEM (original equipment manufacturer) business in the United States, and European commercialization rights related to brodalumab.
The subsequent debt reduction is expected to improve investor sentiment towards Valeant Pharmaceuticals in 2017. In the next article, we’ll explore revenue growth trends for Valeant in 2017.